Page 65 - RusRPTJuly18

8.3 Stock market
8.3.1 Equity market dynamics
According to Bloomberg the outflow from ETF trading EM bonds and stocks accelerated to its highest in the week ending 15 June with overall volume hitting $ 2.7 bn. A lion’s share of the outflows hit stock market ETFs while bond ETFs lost just small $ 85.6 mn. ETFs outflows from EMEA including Middle East and Africa reached only $ 26.4 mn and were the lowest compared to Americas and Asia Pacific.
Inside CEE the largest outflows occurred in Russia in its stock market which saw the $128 mn outflows from ETFs while bond market outflows were minimal at $4.2 mn.
Russian stocks are paying the highest dividend yields in the world with an average of 5.5% and the stocks of the most generous companies handsomely outperform the the leading indices. With peak payout season nearly on us investors are shopping for the bargains.
Russian companies are expected to pay 20% more in dividends this year than last or RUB1.83 trillion ($30bn), VTB Capital estimated in a special report on May 22.
"Between now and YE18, they [Russian listed companies] are to offer RUB1.60 trillion, with the main flow in the summer, when the final 2017 dividend distribution season starts," the bank said in the report that was released in May.
And it is not too late to buy: BSC Global Markets found in a study that buying dividend paying stocks 2-4 weeks before they went ex-dividend produced statistically significant extra returns in previous years. Currently BCS’s dividend basket of names is up 17% YTD, which is 13 percentage points ahead of the dollar denominated Russia Trading System (RTS) index.
The same is true for the overall index. In addition to the plain vanilla RTS index, the M oscow Exchange (MOEX) calculates several indices including the RTS Total Return index, that includes returns from dividend payments as well as two more versions of the same that take into account tax payments. Since the start of the year the RTS TR index is up 17% more than the simple RTS index; inbound investors are buying the dividend yielding stocks before they buy anything else.
“ Starting from the beginning of 2016, the benefit of the RTS Total Return Index versus the RTS Index has been growing constantly and currently the difference is now over 17% and we are not yet through this year’s dividend season,” MOEX said in a note to clients.
RUSSIA Country Report July 2018 www.intellinews.com